NY Times – Once a Close Economic Rival of China, India Falls Behind
The Indian economy has a few genuine bright spots. Pockets of high-tech prosperity have popped up in two southern cities, Bangalore and Hyderabad.
These have benefited from India’s willingness to allow free trade and minimal regulation for new industries, often involving computer software, telephone service centers for financial institutions and other service industries that do not involve moving goods on India’s poor roads.
But success stories like Bangalore and Hyderabad remain a tiny part of the overall economy, because software companies hire workers by the hundreds and not by the tens of thousands, as manufacturers do.
“You look around and the rest is a disaster,” said Joydeep Mukherji, an Asia analyst with Standard & Poor’s. “One billion people are not going to be programming computers; they’re going to be making shoes and cars, and serving coffee.”
Good overview of the differences between the growth of China and India.
The fact that U.S is interested in china depreciating its currency holds the view that china has emerged as a manufacturing powerhouse. chinese goods are scoring over the U.S. goods in the U.S.industry which is seeing a downfall in the manufacturing jobs which had steadily declined after 1973 when us opened up its walls. the indian experts may argue that we are taking the us on a ride in terms of the service industry, but the fact that is ignored here is that the manufacturing sector is the core sector of any economy and a lot of jobs are dependent upon this industry. creating a few ITES jobs does not really matter much for the economy unless and untill the masses who were dependent on the manufacturing sector is catered to. a fact that is being ignored is that india is closing shops to manufacturing industies day by day. what is going to happen to this workers who are losing their jobs and where an entire family is dependent the effects can be directly and indirectly devastating. no wonder china enjoys a trade surplus and we donot. this is just because of the fact that they catered to a large segment of people and provided jobs to them.
“no wonder china enjoys a trade surplus and we donot”
Umm… India had a trade surplus with China of around $225 million during the January-March 2003 period.
Umm…A trade surplus of 0.22 billion. How significant! You Indians are just like that, complacent with those kind of achievements and think you are the best. Keep doing it and very soon you will find out how far behind India will be.
in the near future to come, india is going to be the technology hub of thw world and china-manufacturing hub. no one can deny this fact. It wouldn’t be a threat to any party, but an opportunity. A large chinese market will benefit india in terms of marketing. A growing india will also benefit china in the sense of export. Imagine the combination of population by this two country, china and india alone can feed on their own without trading with the rest of thw world. Providing they are on the right tracks on reforming and opening their market. No ones up and no ones down. It’s gonna be a win win situation
i think that china is going to be an oppurtunity.The india market has an advantage of intellectual capital which can bring about a big difference ..but india needs to be not a global market but a global leader. For that it becomes important to innovate and plan logically
recently,there is a talk about $40b FDI in china & $3b in india.But the fact is that discouraged by dismal rate of interests hardly any americans or other foreigners are now investing in china.
So where does the FDI in china come from ?
50 % of the FDI in china is flight capital returning thru a process known as “round tripping”. chinese businessmen take capital out the country thru under invoicing exports & over invoicing exports & send it back as FDI to take the advantage of preferential tax treatment.
Is China really a threat to Indian IT industry? Can you give me some points which is stronger and in what areas? Other countries outsource projects to India because, in India projects get done at cheaper and high quality. But China is offering at much more cheaper. It can grab the opportunities of India. Give me some more strong and weak areas in IT domain for India as well as China.
lots of figures of china have been upped to give a good picture of the prevailing economic conditions and are not actually true.the gdp of the country is higher without doubt but its a large and more populated country too,but the fdi in comparison in real terms is not as high.and what is shown is not actually true.
Certainly India has a wide gap to bridge but the way Indian Entreprenuers are going ahead the gap between Indian economy and that of China will be narrowed in three to four years.
Many Indian companies like Tata Motors, Reliance are becoming Multinationals and the growth of such companies in Domestic Market will make them Bigs. Company Like ONGC which was a neglected company has become a major global player in Oil and Gas exploration. We have many such examples. One thing no one should overlook “THE INDIAN BRAIN”.
I am sure by year 2020 India is going to be superpower in economy.
I agree that china is ahead of india in terms of eco growth but we dont take few points in consideration that china has opened its resources and its market fully wile in case of india the markets are not opened they r opened to certain extent.which will help india in its future terms.maintainin its product identity.China is not only the manufacturin hub but user also. india has a plus point also in its human resources with more than 58% of its population between age group of 22-30.while china’s population is aging.
Hey “chinese”…a surplus is a surplus! At least the Indian Rupee is pegged to the world-wide currency markets…and not to some constant rate like the Chienese Yuan. If you re-evaluate your currency based on the world-wide market, I’d like to see how cost-effective it is to manufacture in China.
Its typical of Chinese to be haughty and belittle the achievements of others. Try to appreciate others for what they have!
Sounds to me like it’s Indians on this website that are belittling the Chinese. One important point is that population wise, China is not really any bigger, India’s population, as is widely agreed will surpass China’s in the near future. China has taken the time to at least try to fix the infrastructure of the country, good roads and reliable electricity are absolutely necessary for a strong sustainable economy, a high tech computer programming facility sitting next to a dirt road running on generators is not going anywhere strong. You need to take the time and money to fix the infrastructure first, an investment in time and money now will pay in the future, which is what china has done. Another problem is that India’s IT industry is dependent on foreign outsourcing, whatever India’s IT industry develops is for a foreign country, mainly the US. If a country cannot consume what it creates at a reasonable level it is doomed to failure, with the economy down here in the US and many American’s jobless pressure is mounting on companies to stop outsourcing, what happens to India then? I have seen both coutries, there is a very stark difference between the two, those of you arguing and belittling China’s economy should go visit some cities in China. I think the fundamental difference really lies in the populations attitudes, after interviewing people of both populations it seems to me that both populations want to move forward, but it almost seems like Indians have a sort of passive colonial attitude, they want to become the west, using english as an official language, bollywood, and so on, they learn from the west to become like the west. Chinese, though it sounds bad, learn from the west to beat the west, they despise Americans yet will put on a smile just long enough to get what they want, this same attitude put Japan where it is today some 30 or 40 years ago. India fights to walk alongside the US while China fights to become a rival of the US. India’s attitude has to change first, if all you want is to become like the west, 2nd place is the best you can expect. It’s the same aggresive attitude that puts the US where it is today.
One should look beyond this childish competitiveness and look towards progress, and progress on every front, social, political, economic and spiritual. This need not happen at the cost of one nation or the other, to the contrary, both would benefit from each others growth.
They follow two different systems but the aspirations are the same, unfortunately, so are the pitfalls that challenge each system. Both have to deal with over population, rural poverty, and social discord due to unequal urbanisation and last but not least, governments that need to look towards the betterment of its people at the grassroots level before anything else.
Antagonism between neighbours has never helped any nation, if two people want to believe they are in a race, it is better to run without elbowing each other because you waste far more energy and progress at a much slower rate than if you just ran free. But this is not a race and there isnÌt even a finish line as the evolution of nations is an ever continuous process, each with its equal share of failure and triumph.
Well I feel both China and India should work together.The Chinese have excellent maufacturing while the Indians have the software and the language skills to for a win win situation.So China makes the hard ware and we Indians make the software.Well but yes i do accept that Chinese have a great Infrastructure as compared to India.We doo need to introspect and try to improve.And hmmm lets see why is it that there are more Indians in here?
ymccool@yahoo.com
well,it is true thet china is ahead right now.but in the next 20-30 years,india will be ahead
due to it,s immense young population compared to the aging population of china and the chinese don’t have the most important thing that india has:democracy and freedom of speech.
no one can take this from us.
I would like to share your comments on the topic – Will India ever be able to outshine China? When? How?
herees a summation of of both countries..
India vs china
1. china India had same gdp (in ppp) 1990Öabout 1500$. In 2000 chinas gdp = 3600$, indias 2500$.
2. china mf power house..scores over us
3. fdiÖ350 bill$ b/w 1980-2000, ndia 18 billion..
4. china marketers dreamÖegÖone percent penetration of cellphone in IndiaÖ..in china..11 percent..,compÖ4.5 in thousand in IndiaÖchina 15/1000
5. china ..permanent mem of un sec council..
6. china investing heavily in infrastructure Ö.makes it a good investee
7. indias pop wil surpass chinas in a matter of 15 years,,Ö
8. India fights to walk alongside the US while China fights to become a rival of the US. India’s attitude has to change first, if all you want is to become like the west, 2nd place is the best you can expect. It’s the same aggresive attitude that puts the US where it is today.
9. china more open to tradeÖbought $413 billion of overseas-made goods last year, compared with India’s imports of less than $70 billion..above that it exports half the stuff backÖincreased sino us trade projectedÖin fig of 120 billÖin 2005
10. China once it becomes a full-fledged member of the World Trade Organization in 2005. As the producer of 50 percent of the world’s cameras, 30 percent of the air-conditioners and televisions, 25 percent of washing machines and 20 percent of refrigerators, the Chinese are expected to undercut their less efficient neighbors and beat them hollow in competing markets.
11. china expected to catch up indias it industryÖsoftware devpt..
12. chinaÖ 250 million people now belong to what can be called a “middle class,” with family assets of between $18,000 and $36,000,Öcompared to Indias 50 mill
13. indias $547 billion economy grew 10.4 percent from a year earlier in three months to Dec. 31. Not only was it the fastest rate on record for India, it beat China’s growth in any quarter over the past eight years.
14. India has a huge English speking wrk forceÖ.(although china is catching up..eg everyone in Beijing to speak eng b4 olympcs.
15. The rupee has risen almost 9 percent in the past 12 monthsÖChinese currency not decided by market forces..
16. India has abetter structureÖ.its eco is risingÖchina has reached its peak… its time for recession
17. talk about $40b FDI in china & $3b in india.But the fact is that discouraged by dismal rate of interests hardly any americans or other foreigners are now investing in china.
So where does the FDI in china come from ?
50 % of the FDI in china is flight capital returning thru a process known as “round tripping”. chinese businessmen take capital out the country thru under invoicing exports & over invoicing exports & send it back as FDI to take the advantage of preferential tax treatment.
18. India is opening up.. Just last month, International Business Machines Corp. won a $750 million computer-services order from Bharti Tele-Ventures Ltd., India’s No. 2 cellular services provider. In February, Hewlett-Packard Co. bagged a $150 million order to link the computers of Bank of India’s 750 branches. ABB Ltd., Europe’s largest electrical engineering company, won a $13 million order from Tata Steel Ltd., India’s No. 2 steelmaker. Boeing Co. and Airbus SAS are vying for a $2.1 billion 43-polane order from Indian Airlines Ltd., a state-owned domestic carrier.
19. India Ödemocracy, free press, two party sys, no room for cover ups
20. wer does china hide popÖlike the occupancy rate in most high-rise buildings is less than 50 percent, the level of corruption in China is on par with the rest of the world, the Chinese now prefer to put out city rather than national GDPs, and only 1,000 Chinese towns are open to foreign tourists, of which only 359 are open to foreign investors – then some of the fears of the foreign investors gain substanceÖ..also 10 percent Chinese above 60 yrs of age
Major: China behind india on language, but china has better education system, and tony blair said on his visit to china they were pursuing the goal to create 10 universities like Cambridge.
China got a space programme
Chinas got an ‘all wheather’ relationship with Pakistan, plus pakistan is used to stop the muslim in china from harming China, while muslim in India will never harm pakistan but will never harm india either.
China got the olympics, Indias getting the stupid common wealth games in 2010 – says it all.
hi sim,
i want u to consider following facts and then analyse all other things
there is change in growth rate of the two countries and India is catching up moreover India had got higher percentage of people having higher education further to add this India is the biggest player in BPO sector and also u must read following article:
“Is India the new China?” Laura Wallace, the interviewer for IMF Survey, an in-house publication, asked Burton.
.
On Wednesday, it became a prescient question, as an Indian government report showed that the $547 billion economy grew 10.4 percent from a year earlier in the three months to Dec. 31. Not only was it the fastest rate on record for India, it also beat China’s growth in any quarter during the past eight years.
.
Thus, India became the world’s fastest-growing major economy. Simultaneously, the Indian rupee rose to its highest in four years against the U.S. dollar, making a lot of imported goods that were outside the reach for a majority of the country’s population suddenly look cheaper.
moreover, there were economic reforms take place in china in 1978 and in India it was in 1992 so it will create differences further to add to your knowledge in year 1990 there was boom in Chinese economy because of the reason that majority of the population was under 40 years which makes all the difference and same will be the case with India in year 2010 so we can easily expect India to become global leader and surpassing china
so now i suppose u had got ur answer and will try to find something new
I am a neutral, but I think the competition
will be more intense 10 years down the road,
with China slowing down and India speeding up.
(Ignore the e-mail address, I know it’s stupid)
I recently shifted to singapore which is a chinese dominated society. Iam really surprised by there ruthless efficiency and hard working nature.They are really far better than us as of now.
1) They are practical.
2) No stupid religious hangups.
3) Cunning
4) Respect authority.
Every indians thinks he is the boss and the best and is never ready to accept authority.
we are also politically demented and corropt.
and most importan we have bat work ethics given the option we will waste time instead of using it productively.
China:skyscrapers vs shattered houses of ‘cheap’workers
What matters is not just the gdp but the sections that contribute to it.China’s gdp is undoubtedly higher then india but its important to note that around 30% of contribution comes from exports.Add to it the role of domestic manufacturers who are mainly suppliers to exporters and it exceeds 50%.Agriculture which sustains a much bigger population of the country hardly contributes.china is just a communist form of dictatorship which is presently encouraging state owned capitalisation.labours(cheap) of whom china is very proud and which have actually given china the cost competitiveness it enjoys today are leading substandard lives.Economy and efficiency if does not catter to the need of those who need it the most becomes useless.That unfortunately is the state of affairs in china today.
Jobs may not be growing fast enough in the U.S., but they are multiplying elsewhere. Over the next 15 years, 3.3 million U.S. services industry jobs and $136 billion in wages will desert the country, according to research by Forrester. Although a flurry of low-wage countries will benefit from the trend, China and India have so far scooped up most of the jobs and they are now home to the biggest overseas operations of some U.S. companies.
Why are jobs being farmed out to these two destinations in particular? Both countries offer cheap labor rates and have different areas of expertise. The cost of an entry-level programmer in China is 30% to 50% less than one in Chicago. Additionally, a combination of factors like standardized business application, better online cooperative tools and increased bandwidth have recently precipitated the rise of off-shoring.
Of the two countries, India remains the No. 1 choice for many U.S. companies because of the maturity of its outsourcing market and its telecom infrastructure. But China is quickly imposing itself as a cheaper alternative, especially attractive to companies eager to explore its huge local market. Other countries like the Philippines, Singapore, Russia and Ukraine have lately surfaced as interesting alternatives to the two giants. But they lack experience and, in some cases, political stability.
In the upcoming years, expect India to continue its move up the food chain and take on some of the more complex outsourced tasks while more back-office jobs move to rock-bottom wage countries such as Vietnam and Uruguay.
India has a couple of advantages that china does not which the chinese keep on neglecting it is more adaptive to change.
Change in indias business largely not because of a government initiatives but largely because of individuals looking for market oppurtunities both as a buyer and seller of anything they could come up with. Indians mostly succeded at IT, services, software stuff. Change in china came because of the government positioning itself as a seller of
“manufactured goods”. The indian SW businessman is a real businessman. There are plenty of middle and small businessman selling sw/services. The small chinese businessman unfortunately does not exist. He has to piggyback onto a larger businessman with political clout to be able to open a business. Forget survival. This scenario exists in india in other sectors but not in theier sw/it sectors.
The other real issue is that the chinese government does not reveal any of the raw data beyond a superficial provincial record that it uses to come up with statistics for GDP GDP growth etc. These is where India has the advantage.
China should learn from that and forget about
metrics and just let the businessman work.
Imagine what india did in SW. China can do in 30-40 fields. China has better education when it comes to educating a large segment of the population covering variety of fields. India has only focused on Electrical and Computer Engineers from elitist schools. There is nothing in material science, chemical engineering etc
why dont v consider this possibility ?
china AND india working together ,,,
19th century belonged to the europeans, 20th century to the US ,, this century will be ours,
cheers to the asian might,
kris
I have been reading everyone’s comments with a lot of interest and I have some points to put:
1. IT services- India’s domaination in outsourced IT services is purely based on “first mover advantage”. The exit barriers put up by India are cost, language and lastly the no. of engineers it generates every year. Language however, is not an exit barrier for the Chinese. Therefore, it is only time that will tell, whether China can compete without these limitations in the same markets as the Indians.
2. Culture – Although some folks here said that Indians like to work “along” with the US and not against it shows that Indians by naure and culture are not agressive individuals. This surprisingly works well for them because most Indians do the job well for their western counterparts and therefore get exceedingly more work without threatening their jobs. Chinese on the other hand ( before anyone counters this. I have worked in China for a year so I know) have mindset that is pretty much like the great wall of china that is they will not let anyone intrude their culture and are obviously superiorly confident of their own culture. Its good but in the services sector, that will not be good enough. The govt maky teach them english but servicing is a mental thing. Its the attitude to serve and deliver. You dont need that in manufacturing and therefore India has an edge there.
3. Infrastructure – India can eat humble pie there. Our infrastructure sucks. Look at cities like Mumbai and B’lore. They can never compare with Shangahai or Bejing. The Chinese have done a marvellous job of building topclass infrastructure in these cities and today the average dumb politician in India talks about making Mumbai like Shanghai. Something China did first and better than India will EVER do. As Indians dont we despise our roads, filth and infrastructure. My view is that if we cannot get the basics right you cannot compete in the world market. Basics – Get good roads, drinking water, telecom and education/literacy levels high before bragging about anything else. Here China wins hands down.
4. Sports- Finally, someone here said, presumably Chinese, that we got the Olympics and India got the stupid commonwealth. How true. As sportsmen we suck, as a sporting nation we suck. WE can never host the olympics because we dont have the infrastructure. The atheletes will prbably end up living in slums and brick shelters. We just lose the battle there even before it started.
5. wealth – India is not a rich nation. Indians are fairly rich but outside india. The average Indian living abroad is quite well off. That pretty much sums up our attitude. We are a selfish nation where everyone makes welath because we are so insecure about our own future.
( I am including myself) How many NRIS contribute back to our own country ? Very few cos they know about our corrupt govt and sickeningly stinky beauracratic procedures. FDIs are not common amongst NRI holding companies. They are pretty much exclusively done by europeans and americans.
6. Manufacturing – aha, something close to my heart. Cmon folks, China has beaten our pants down here. The Tatas, birlas and ambanis have given nothing but cheap, low-quality products and we as a nation dont have more than 1-2 companies in the fortune 500. Compare that with thye superior manufacturing prowess that China shows. Almost everything I buy here in US is from China.
India cannot match up to those standards. Our regulations, labor laws and attitude to creating good products will never be as good as the Chinese. Sam Pitroda said that he could never get an adapter to work in a hotel he stayed once in India cos it was “made in india”. That pretty much sums it up.
Why China matters so much
The BBC is running a special week of coverage of China from 7 March 2005. Paul Reynolds, World Affairs correspondent for the BBC News website, explains why the country deserves such attention.
http://news.bbc.co.uk/2/hi/asia-pacific/4315109.stm
China used to be called a sleeping giant. Now, as the world’s fastest growing major economy, it is often called a waking giant.
Yet it might be more useful to understand it as something else – as a giant which wants to regain its rightful place.
From 7 Mar 2005 BBC News is presenting a special week of coverage of China. Use this guide to learn more about the country with the world’s biggest population, and its most dynamic economy.
http://news.bbc.co.uk/1/hi/in_depth/asia_pacific/2004/china/default.stm
Why China matters so much
The BBC is running a special week of coverage of China from 7 March 2005. Paul Reynolds, World Affairs correspondent for the BBC News website, explains why the country deserves such attention.
http://news.bbc.co.uk/2/hi/asia-pacific/4315109.stm
China used to be called a sleeping giant. Now, as the world’s fastest growing major economy, it is often called a waking giant.
Yet it might be more useful to understand it as something else – as a giant which wants to regain its rightful place.
From 7 Mar 2005 BBC News is presenting a special week of coverage of China. Use this guide to learn more about the country with the world’s biggest population, and its most dynamic economy.
http://news.bbc.co.uk/1/hi/in_depth/asia_pacific/2004/china/default.stm
Why China matters so much. The BBC is running a special week of coverage of China from 7 March 2005. Paul Reynolds, World Affairs correspondent for the BBC News website, explains why the country deserves such attention. (http://news.bbc.co.uk/2/hi/asia-pacific/4315109.stm)
China used to be called a sleeping giant. Now, as the world’s fastest growing major economy, it is often called a waking giant. Yet it might be more useful to understand it as something else – as a giant which wants to regain its rightful place. And that rightful place, it thinks, is at the centre of the world. From 7 March 2005, BBC News is presenting a special week of coverage of China. Use this guide to learn more about the country with the world’s biggest population, and its most dynamic economy. http://news.bbc.co.uk/1/hi/in_depth/asia_pacific/2004/china/default.stm
We have to face the harsh realities in India. It is a cesspool of corruption. It will never develop. I am not against my own country. I am just on the side of truth
I’ve read most of the items on the website above, they are not all bright stories. India is doing better than CHINA can in some areas.
As quite clear, the debate is ongoing, I had first posted my comment on the same issue last year in April and here I see even today that the topic is still hot..well, India in order to become a leader needs to look and care of its core competence and give more emphasis to the entrepreneurial development. Also, the education ystem needs to be revolutionized..then only it will be ahead of china as well as th world.
As quite clear, the debate is ongoing, I had first posted my comment on the same issue last year in April and here I see even today that the topic is still hot..well, India in order to become a leader needs to look and care of its core competence and give more emphasis to the entrepreneurial development. Also, the education ystem needs to be revolutionized..then only it will be ahead of china as well as th world.
Never been to china and don’t know much about it. But have worked with Chinese people in USA and the only thing they don’t have so far is english speaking skills.Once they over come that drawback, they are in no way behind Indian IT pros. About India, I think we Indians need to fix our attitude first. Indian media seems to desperate to get approval from the west that at times they do huge mistakes. Competition and comparision is good. But why is the need to compare at every moment. And IT and BPO companies don’t represent the real India. Everybody talks about Indian IT and GDP and stuff but no body ever mentions what India plans to do about millions of people living a life of grave poverty and hunger. Is it more important to see how we are doing in comparison to China , than to consider what we should do about the millions of kids who can’t score a decent meal in a day. I think hi tech progress is great but Indians and even Chinese can’t claim any real progress untill and unless every citizen is able to sleep with his stomach full in the Night. And this is what US and many other countries have achieved and that’s what makes them great.
China can not match India’s IT. China and the Chinese can not speak or write English properly even after living in the West for decades. They also do not have the first tier experience India does. Chinese immigrants do not earn the the same as Indian immigrants. They are far behind Indians in professional skills as well. They are ahead only in getting MNC. into China and then copying them. India on the other hand is building much of it’s own infrastructure. India though should not trade with China for machines as China runs on slave labor. Slave labor drives China. And China has no freedom. India should use the lack of freedom in China to it’s own advantage. Also India needs deeper penetrating missles, so China can not be a menace to India.
Well, one thing is for sure, we Indian’s surely beat the Chinese hollow when it comes to discussing and sharing views!No wonder this place ONLY has INDIANS!!(Just like me!)
Yogeshmchabria@gmail.com
The Future Doesn’t Speak French
Does the Future Belong to China?
A new power is emerging in the East. How America should handle unprecedented new challenges, threats—and opportunities.
NEWSWEEK Specail Report:
http://www.msnbc.msn.com/id/7693580/site/newsweek/
The report says ‘China’s rise is no longer a prediction, it is a fact’. I think it’s too early to tell. However, I do want to go to China to have look.